Friday, February 22, 2013

Money in Politics This Week

Every Friday, the Brennan Center will be compiling the latest
news concerning the corrosive nature of money in New York State politics—and
the ongoing need for public financing and robust campaign finance reform. We’ll
also be linking to dispatches from around the country highlighting the national
scope of this crisis. This week’s links were contributed by Syed Zaidi.

After
former New York City Mayor Ed Koch sadly passed away this month, Frederick
Schwarz, chief counsel at the Brennan Center, explained in a New York Daily News op-ed how we can
honor Koch’s legacy. In 1986, when Ed Koch was Mayor, some of his top political
allies had been caught using their office for personal gain in a scandal that rocked
the city. Koch seized the opportunity to reform New York City’s campaign
finance system. Along with the City Council, he instituted a small donor
matching program with low contribution limits. In 1989, in the first election that followed, all three
mayoral candidates—Koch and David Dinkins, both Democrats, and Rudy Giuliani, a
Republican—praised the new system and participated in it. Today, the benefits of the system are even clearer:
the number of small donors to political candidates has grown, and elections
field more competitive races. Although New Yorkers are now more confident in
City Hall, they lack the same faith in Albany. In state elections, contribution
limits are too high and big money donors reign supreme. New York State would do
well to take a lesson from Ed Koch’s legacy and enact public financing.

New Disclosure Bills Proposed in
New York Legislature

Secret
money spent by outside organizations has become increasingly common in American
elections, including New York State and federal contests. In response, Assembly
Speaker Sheldon Silver has sponsored a bill
that would increase the disclosure requirements imposed on outside spenders. And
State Senator Rubén Díaz has proposed a bill that would
mandate elected officials to post their campaign contributions on their
websites, including the source and amount of each major donation. In the Huffington Post, Ian Vandewalker,
counsel at the Brennan Center, argues that it is important for the public to
know who is behind the political ads they are bombarded with every election
cycle. Voters should be able to make an informed decision on Election Day.

George McDonald Challenges NYC
Contribution Limits in Court

A
Republican candidate for mayor, George McDonald, has
accepted 10 campaign contributions in excess of New York City’s $4,950
legal limit, including one for $40,000. His campaign has also obtained a
$120,000 loan in violation of the City’s election laws. McDonald filed a
lawsuit earlier this year to invalidate the City’s contribution limits, which
he argues run afoul of state law. The case is ongoing, and McDonald and the New
York City Campaign Finance Board are set to appear in court on March 12th.
McDonald would face a $57,050 fine from the New York City Campaign Finance
Board if he doesn’t return the excess contributions. If his legal challenge
prevails, McDonald will likely face no penalty. The City is defending the contribution limits.
Campaign Finance Board spokesman Matthew Sollars said it “reduces the influence
of deep-pocketed special interests and keeps corporate money out of our
elections.”

Corporations Donate $670,000 to New York State Candidates, Save $2.4
Billion in Taxes

A December
report from the US Public
Interest Research Group showed that America loses nearly $150 billion to
corporate tax havens each year. Regional assessment of the data by the Fair
Elections Coalition for New York campaign demonstrates that offshore tax havens cost New York State $2.4
billion in annual tax revenues. Seventeen multinational corporations, including
Bank of America, Citigroup, PepsiCo and Pfizer, sheltered billions of dollars
in these accounts. At the same time, these 17 corporations also contributed
over $670,000 to New York State politicians, including individual legislators,
the Republican Senate Campaign Committee and the Democratic Assembly Campaign
Committee. As Karen
Scharff of Citizen Action explains, “You can never tie a specific policy to a specific to campaign
contribution. But you can tie the overwhelming preponderance of behavior.” At a
time of dire fiscal shortages, and suggested cuts to education and healthcare,
it is critical to reform the system which creates the perverse incentives for
politicians to pass such inequitable tax policies. Citizen-funded elections are
critically needed in New York State. The estimated
cost of $25-$42 million is
well worth it.

On Tuesday, the Supreme Court agreed to hear a challenge to
decades-old federal campaign contribution limits. The case, brought by Alabama
political donor Shaun McCutcheon, seeks
to challenge aggregate contribution limits—the total
amount that a donor may give to candidates, parties and PACs in a cycle. If
the Supreme Court strikes down these aggregate limits, it would represent a
fundamental reassessment of a principle established in Buckley v. Valeo
in 1976—that direct campaign contributions may
be strictly regulated because of their potential for corruption. The lower
court ruled against
McCutcheon, reasoning that without the aggregate limits candidates could
solicit enormous sums and then “know precisely where to lay the wreath of
gratitude.” McCutcheon has stated that he is prepared to abide by contribution
limits to individual candidates and groups, which currently stand at $2,600 per
election to federal candidates, $32,400 per year to national party committees,
$10,000 per year to state party committees and $5,000 per year to other
political committees. However, he objects to the separate two-year aggregate
limits of $46,200 for contributions to candidates and $70,800 for contributions
to groups.

New ABA Resolution
Urges Congress to Mandate Disclosure

The
American Bar Association has adopted
a resolution in support of disclosure of political and campaign spending
during its Midyear Meeting in Dallas. The
resolution, 110B, urges Congress to require all outside spenders to disclose the source
of their funds and the amounts spent. The resolution requests that
contributions “used for making electioneering communications and independent
expenditures,” as well as “the amounts spent for such communications and expenditures”
be publicly disclosed in reports filed with the Federal Election Commission. According to ABA President Laurel Bellows, the new policy “increases
transparency and gives voters the information they need to make informed
decisions.” “Making the amount spent on political communications widely
available is in the public interest and will instill greater confidence in our
electoral system,” she added.

On Wednesday, President Barack Obama
officially nominated Richard Cordray to head the Consumer Financial Protection
Bureau. Cordray formerly served as the Attorney General of Ohio. The CFPB was
established by the Dodd-Frank financial reform legislation as a watchdog agency
to oversee the financial industry. Republican Senate Minority Leader Mitch
McConnell has pledged to filibuster the nomination until several changes are made to weaken the Bureau’s
oversight capacity. Just as outside spending played an
important role in Chuck Hagel’s confirmation battle, campaign contributions from Wall Street may play a role
in Cordray’s. According to FEC filings compiled by the Center for Responsive
Politics, Senator McConnell recently held a fundraiser in New York City at the
offices of Moore Capital Management, a large hedge fund. Additionally, he
received $38,000 from Travelers Insurance donors in the fourth quarter.
Travelers Insurance lobbied
on the implementation of the
financial reform legislation during that period. The American Bankers
Association PAC donated
$5,000 to McConnell’s
Bluegrass Committee leadership PAC on January 1st. A thorough list of contributions
is available on the Public Campaign website. McConnell’s Wall Street donors are
hoping he will stifle the agency in charge of protecting consumers from the
excesses of the financial industry.

Jesse L. Jackson Jr., a former Democratic Congressional
Representative from Illinois, pleaded guilty Wednesday to one felony fraud
count for his use
of $750,000 in campaign funds to pay for personal
expenses. As part of a plea agreement, prosecutors recommended that Jackson
receive a sentence of 46 to 57 months in prison. Robert L. Wilkins, the judge
overseeing the case, is scheduled to sentence Mr. Jackson on June 28. Jackson’s
wife, Sandi, pleaded guilty to falsifying income tax statements while Jackson
was extracting funds from his campaign treasury. Prosecutors will seek a
sentence for her of 18 to 24 months. From 2007 to 2011, Jackson purchased
$10,977.74 worth of electronics at Best Buy, and spent $5,587.75 for a vacation
at the Martha’s Vineyard Holistic Retreat. Other expenditures included $313.89 for
stuffed animals at Build-A-Bear workshop and a $7,000 elk head from a
taxidermist in Montana. “For years I lived off my campaign,” Jackson, said. “I
used money I shouldn’t have used for personal purposes.”